Reverse Mortgage Saves 2 Homes

http://www1.pressdemocrat.com/article/20080504/NEWS/179367206/1036/BUSINESS01

 

The Santa Rose (CA) Press Democrat has a great story regarding how a reverse mortgage was used to save a home from foreclosure.

“Facing foreclosure on her Sebastopol home and Petaluma rentals,” Anna n-ha(cq) Millee used a reverse mortgage to pull cash out of the properties and pay off her lenders,” according to One borrower’s return from edge of foreclosure. The paper says the borrower was “able to tap $276,000 in equity based on her age and the value of the Sebastopol home. Now, she doesn’t have to pay the $1,500 mortgage on the Sebastopol home, leaving more money for daily needs.”

Notice that she not only saved her home from foreclosure, she also saved a rental unit with the reverse mortgage funding she was able to get.

The story continues:

“There also was enough money left to improve the income property. She plans to eventually put tenants back into the units and restore lost income that led to her financial dilemma.

“I was in total panic. Right now, this meets my needs completely,” she said.

“Reverse mortgages have gained popularity as retirees find turning equity into cash can meet different goals in their lives.

“Paying off home loans, pulling out cash for living and health care expenses, making home repairs top the list. For the 69-year-old n-ha Millee, it’s all of the above.”

You don’t like to see anyone forced to borrow for any reason. That said, at a time when lenders are lopping off withdrawals from home equity lines of credit (HELOCs) and closing the door to new financing, at least Ms. Millee had somewhere to turn and — no less important — she didn’t lose her home.

“She was able,” says the paper, “to tap $276,000 in equity based on her age and the value of the Sebastopol home. Now, she doesn’t have to pay the $1,500 mortgage on the Sebastopol home, leaving more money for daily needs.”

Reverse mortgages were never intended to save homes from foreclosure. That said, saving a home from foreclosure seems to be a small-but-growing use for reverse mortgages. For those who may face the loss of their homes, the idea of a reverse mortgage lifeline has great value — especially as alternative financial options disappear.